Archive · 2 Jun 2025
RBI Bond Program Aims to Boost Accommodative Policy
The Reserve Bank of India (RBI) is buying bonds to help the economy.
This action, totaling ₹1.25 lakh crore, is a way to keep interest rates low and encourage banks to lend money.
The RBI wants to make sure that when they lower interest rates, it actually helps people by lowering the cost of borrowing.
They aim to have extra money in the banking system, about 1% of what banks hold in deposits.
Experts think this will help interest rates on loans go down in the coming months, possibly below 9%.
While some wonder if the RBI is also dealing with some financial moves in the background, the main goal is to keep the economy moving forward.
RBI announced a ₹1.25 lakh crore bond purchase program (OMOs).
Citi believes the move aligns with RBI's accommodative stance.
The goal is to improve the transmission of rate cuts.
RBI targets a liquidity surplus of around 1% of banks' NDTL.
Weighted average lending rates are expected to fall in the coming months.
- Who
- Reserve Bank of India (RBI) and Citi India
- What
- RBI announced a ₹1.25 lakh crore bond purchase program (OMOs).
- When
- The announcement was recent, and the impact is expected over the next few months.
- Where
- India
- Why
- To maintain an accommodative monetary policy stance, improve rate cut transmission, and manage liquidity.
Liquidity Management
RBI's Forward Positions Impact
Main Reason for OMOs
Liquidity Management
The RBI is managing liquidity at a targeted level.
RBI's Forward Positions Impact
Upcoming maturities of $80 billion in forward foreign exchange positions may be driving the OMOs.
- Bond Purchase Program
- ₹1.25 lakh crore
- Monetary Policy Stance
- Accommodative
- Target Liquidity Surplus
- 1% of NDTL
- Expected Lending Rate
- Below 9%
- RBI Dividend to Govt (May)
- ₹2 trillion (approx)